What happened
The First Circuit on Wednesday rejected a Puerto Rico landowners' appeal over interest tied to condemnation proceeds, holding that their challenge to a 15% administrative fee was filed in violation of PROMESA's automatic stay and that their separate interest-disbursement theory failed for lack of standing.
The ruling ends, at least in this appeal, José Ernesto Hernández-Castrodad and Iris Marta Marcano's effort to pursue claims against Sigfrido Steidel-Figueroa in his official capacity as administrator of Puerto Rico's Administration of Tribunals. The panel dismissed the appeal from summary judgment on the administrative-fee claim and affirmed dismissal of the remaining claims.
The case arose from Puerto Rico eminent-domain proceedings that began in 2011 and led to a 2018 final judgment ordering more than $2.4 million in just compensation. The landowners had been paid the just compensation owed under that judgment, leaving a dispute over interest that accumulated while estimated and awarded compensation sat in court deposits before withdrawal.
The plaintiffs alleged that OAT's handling of the interest, and its asserted 15% administrative charge on accrued interest, amounted to unconstitutional takings and due process violations. The district court dismissed most of the case, later revived a narrowed prospective takings claim over the administrative fee, and ultimately entered summary judgment for Steidel on that claim.
On appeal, the First Circuit said PROMESA changed the jurisdictional landscape. Because OAT's asserted administrative fee was treated as property of the Commonwealth debtor, the court said the landowners' request to prevent or recover that fee fell within the automatic stay incorporated into Puerto Rico's Title III restructuring regime.
That conclusion meant the administrative-fee claim was void and without legal effect, depriving the appellate court of jurisdiction to review its merits. The panel emphasized, however, that its inability to reach the merits should not be read as approval of retaining any percentage of a litigant's just compensation award, and it did not decide whether the claim was discharged under the Title III plan.
The court took a different route on the interest claim. It said the appellants did not meaningfully answer the district court's standing rationale: that they were challenging allegedly opaque procedures for calculating and disbursing interest without alleging that they had requested disbursement and been denied a concrete benefit.
The panel also said the appellants had not developed any separate argument on their due process claims, leaving those claims waived. The parties were ordered to bear their own costs.